Lessons from Northvolt’s collapse

Manufacturing

Northvolt faced significant manufacturing difficulties that contributed to its downfall. Despite having strong demand from European carmakers like BMW and VW, the company struggled to ramp up production at its Gigafactory in Sweden. Sam Jaffe explains that battery manufacturing is highly complex, involving multiple mini-factories that must work in harmony, a challenge Northvolt couldn't overcome 1. This complexity was compounded by their choice of battery chemistry, which didn't align with market shifts towards LFP batteries 2.

It's chemistry, it's hard science to make that work. Right. So it's definitely not every battery factory that I've been familiar with has had significant problems with ramping up.

--- Sam Jaffe

The cancellation of a $2 billion order by BMW due to quality issues further accelerated Northvolt's decline, highlighting the critical nature of these manufacturing challenges.

   

Supplier Issues

Supplier issues played a pivotal role in Northvolt's collapse, particularly their relationship with the Chinese equipment supplier Wuxi LEAD. Shayle Kann notes that Wuxi was responsible for providing and installing most of the factory's equipment, but problems arose in ensuring it functioned correctly 3. Communication barriers, both linguistic and cultural, exacerbated these issues, as effective collaboration is crucial in such complex projects 4.

You need flexible, responsive equipment suppliers who want to work with you, preferably who speak your language.

--- Shayle Kann

The lack of clear communication and alignment between Northvolt and Wuxi LEAD hindered the factory's operational success, contributing to the company's downfall.